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CAD target of $70 billion reachable, says Rajan

Mumbai, Oct 8, 2013, PTI:

The Reserve Bank Governor Raghuram Rajan on Friday said the government's target of reducing the current account deficit (CAD) to $70 billion or 3.7 per cent of the GDP in 2013-14 is "imminently reachable".

"...there is increasingly a sense amongst analysts, amongst commentators that India's current account deficit (CAD) problem is under control. $70 billion that government proposed as a CAD after calculating it with us seems now imminently reachable. Some independent analysts are saying it will be even better," Rajan told a TV channel.

The government is targeting to bring down the CAD, the gap between foreign exchange outflow and inflow, to $70 billion this fiscal.

The general sense amongst the public, he said, is that CAD is now an issue and barring exceptional circumstances like a dramatic price hike in oil, is going to be under control.

The financing of CAD is in place, he said, adding, "There was a period where analysts were competing with each other to find a bigger number for the rupee-dollar exchange rate, now most people say wherever it is, few rupees this way, that way is a reasonable level".

The Governor's confidence on lower CAD emanates from drastic reduction in gold imports and pick in merchandise exports.